SPEECH BY PRESIDENT MARTTI AHTISAARI OF THE REPUBLIC OF FINLAND
AT THE FORUM 2000 SEMINAR,
SOVINCENTRE, MOSCOW ON 26.11.1997
THE FUTURE BELONGS TO TRADING PEOPLES
This year we are celebrating the 80th anniversary of Finnish independence and the city of Moscow's 850th birthday. In celebration of our shared jubilee year, a large number of Finnish and Russian representatives of political and economic life, science and the arts are congregating in Moscow just now. Events of this kind, covering as they do the full spectrum of our relations, are needed, and I thank all who have contributed to organising both this FORUM 2000 seminar and the entire programme of events so well.
The world economy has been globalising rapidly in the nineties. The market economy has been launched in Russia and numerous other countries. Against this background of transition, trade between Finland and Russia has nevertheless been steered onto a course of strong growth.
The Bolshevik victory 80 years ago meant the collapse of trade between us and condemned it to a waning existence for eight decades. The borders were closed. That put Finland under considerable pressure to adapt, but we coped. Stalin did not want to see the benefits that an international division of labour brings, but instead tried to create an autarkic economy.
The post-Second World War Soviet Union needed the outside world to help stimulate reconstruction. The large war indemnity paid by Finland made our shipbuilding and mechanical engineering industries well-known in the Soviet Union. These sector retained their central role in our exports until the end of the eighties. On the whole, trade developed positively throughout that period. One factor that did disturb an otherwise steady development was the oil price fluctuations in the seventies and eighties, which eventually fed through and adversely affected our exports.
Decades of cooperation created mutual understanding and benefited both parties. Each of us knew the other's strengths and what he had to offer.
Much of this experience still remains. In all of the OECD countries, the service sector of the economy has been growing alongside industrial production since the sixties. Besides that, new elements have been added to the Finnish industrial structure in the nineties. Alongside the traditional sectors of wood processing and mechanical engineering, a new sector, the manufacture of electronic and electrotechnical equipment, has emerged and is now by a substantial margin the fastest-growing sector. Finland is right at the top of the European table in terms of advanced-technology products as a proportion of total exports. That has not yet been fully reflected in trade between our countries.
Yet these extensive changes in the Finnish industrial structure are quite slight if we compare them with the transformation that the Russian economy has had to undergo in recent years. Major political and economic reforms have been carried out under President Yeltsin's leadership. Although the key ratios describing the Russian economy indicate that overall output has been declining throughout the period since the disintegration of the Soviet Union, trade between our countries has rapidly climbed out of the trough into which it slumped during the time of change around the turn of the decade. Trade has continued to develop positively. Figures for the first eight months of this year show that our exports to Russia are up 24%, whilst our imports from you have grown 29%. Total trade between us is forecast to increase to around $5 billion for the whole of this year.
Still missing from the figures are the capital goods that largely dominated our trade for decades. We shall be trying to redress that matter by means of the package of guarantees and financing arrangements that we are signing tomorrow. Getting business going again between thousands of enterprises all over Russia and the around 3,000 Finnish companies that trade with your country has certainly not been easy. Thanks for success in doing so are due to companies and their employees.
Enlargement of the European Union is continuing. Finland, Sweden and Austria joined in 1995. Enlargement will increase stability and create prosperity throughout Europe. When Finland became a member, the EU acquired a northern dimension. Now the EU and Russia share a common border, a fact that creates new prospects for cooperation.
Since the accession of Finland the European Union has had one member state for which Russia is not a distant great power, but rather a close cooperation partner. We want this to be reflected also in relations between the EU and Russia and believe that prospects for this are better than in the past. The Partnership and Cooperation Agreement between the European Union and Russia is finally coming into force.
The Partnership and Cooperation agreement is a first step and with its help interaction will be strengthened and the network of agreements expanded. Among the longer-term goals enshrined in the agreement are free trade between the EU and Russia. This, too, demonstrates that the parties are prepared to develop their relations within a protracted time frame.
Russia's role as a Eurasian power is not, of course, confined to Europe. Finland, together with the other EU members, supports Russia's endeavours to integrate into the world economy. In this process, membership of the WTO is the step that is most important of all and will have the farthest-ranging effects. Russia is already a member of the Club of Paris.
The speed with which economic interaction between Finland and Russia has invigorated itself has highlighted, also in the media, some bottlenecks in development. The volume of road traffic has quintupled in the past five years. These matters have been discussed a lot between our countries in recent times. Our membership of the EU has made the ease with which traffic passes our common border the subject of also European interest. Finland regards these matters as very important. We hope that both disputes about charges levied on trucks and our air services, which have become a bottleneck, will be resolved as soon as possible.
I note that the changes that have taken place in recent years have taken economic cooperation between our countries in a positive direction. It is now based on sound principles of trade. That also creates a solid foundation for the development of investment. Now that the Russian economy has turned onto a path of growth, legislation is being brought into sharper focus and the tax system revised, more stable conditions for both trade and investment are being created. Further reinforcing this positive trend are Russia's broadening European cooperation and her integration into world trade.
I believe that on this basis Finnish and Russian companies can look confidently to a future extending into the next millennium. In a globalising world, the future belongs to trading peoples.